Potential Appraisal: Objectives, Purpose, Advantage, Steps

Potential appraisal is a part of performance appraisal that helps to identify the hidden talents and potential of the individuals. Identifying these potential talents helps in preparing the individuals for higher responsibilities and positions in the future. It focuses primarily on identifying the employee’s likely future roles within the organization.

What is Potential?

Potential can be defined as ‘a latent but unrealised ability’. Potential includes the possible knowledge, skills, and attitudes the employee may possess for better performance There are many people who have the desire and potential to advance through the job they are in and wanting the opportunity to operate at a higher level of competence in the same type of work. The potential is the one that the appraiser should be able to identify and develop because of the knowledge of the job. This requires an in-depth study of the positions which may become vacant, looking carefully at the specific skills that the new position may demand and also taking into consideration the more subjective areas like ‘qualities’ required. There may be areas where the employee has not had a real opportunity to demonstrate the potential ability and there may be areas with which you, as the appraisers are not familiar.

Indicators of Potential

  • A sense of reality: This is the extent to which a person thinks and acts objectively, resisting purely emotional pressures but pursuing realistic projects with enthusiasm.
  • Imagination: The ability to let the mind range over a wide variety of possible causes of action, going beyond conventional approaches to situations and not being confined to ‘This is the way it is always being done!’
  • Power of analysis: The capacity to break down, reformulate or transform a complicated situation into manageable terms.
  • Breadth of vision: The ability to examine a problem in the context of a much broader framework of reference; being able to detect, within a specific situation, relationships with those aspects which could be affecting the situation.
  • Persuasiveness: The ability to sell ideas to other people and gain a continuing commitment, particularly when the individual is using personal influence rather than ‘management authority’.
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Purpose of Potential Appraisal

The purposes of a potential appraisal are:

  • to inform employees of their future prospects
  • to enable the organisation to draft a management succession programme;
  • to update training and recruitment activities;
  • to advise employees about the work to be done to enhance their career Opportunities

Objectives of Potential Appraisal

One of the important objectives of potential appraisal is to help employees to move upwards in the organization

Advantages of Potential Appraisal

The advantages of a thoroughly carried out potential appraisal are:

  • The organizations are able to identify individuals who can take higher responsibilities.
  • It also conveys the message that people are not working in dead-end jobs in the organization.
  • The identification of employee potential to ensure the availability of people to do different jobs helps to motivate employees in addition to serving organisational needs.

Steps of Potential Appraisal System

  1. Role Description: A good potential appraisal system would be based on clarity of roles and functions associated with the different roles in an organisation. This requires extensive job descriptions to be made available for each job. These job descriptions should spell out the various functions involved in performing the job.
  2. Qualities Required: Besides job descriptions, it is necessary to have a detailed list of qualities required to perform each of these functions. These qualities may be broadly divided into four categories:
    1. technical knowledge and skills
    2. managerial capabilities and qualities
    3. Behavioural capabilities
    4. Conceptual capabilities.
  3. Indicators of Qualities: A good potential appraisal system besides listing down the functions and qualities would also have various mechanisms for judging these qualities in a given individual. Some of the mechanisms for judging these qualities are:
    1. Rating by others
    2. Psychological tests
    3. Simulation games and exercises
    4. Performance appraisal records.
  4. Organising the System: Once the functions, the qualities required performing these functions, indicators of these qualities, and mechanisms for generating these indicators are clear, the organisation is in a sound position to establish and operate the potential appraisal system. Such establishment requires clarity in organisational policies and systematisation of its efforts.
  5. Feedback: If the organisation believes in the development of human resources it should attempt to generate a climate of openness. Such a climate is required for helping the employees to understand their strengths and weaknesses and to create opportunities for development. A good potential appraisal system should provide an opportunity for every employee to know the results of assessment. He should be helped to understand the qualities actually required for performing the role for which he thinks he has the potential, the mechanisms used by the organisation to appraise his potential, and the results of such an appraisal.

steps of potential appraisal system

A good potential appraisal system provides opportunities continuously for the employee to know his strengths and weaknesses. These are done through periodic counseling and guidance sessions by either the personnel department or the managers concerned. This should enable the employee to develop realistic self-perceptions and plan his own career and development.

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